Business Moves

Tokio Marine, Philadelphia Insurance

Japan’s Tokio Marine Holdings, Inc. has agreed to acquire Philadelphia Consolidated, a U.S. property/casualty insurance company offering specialty commercial property and casualty insurance to targeted markets.

The total transaction value is approximately $4.7 billion. It is considered the biggest acquisition of a U.S. company by a Japanese financial firm.

The cash transaction is expected to close in the fourth quarter of 2008.

For 2007, Philadelphia Consolidated reported total revenues increased 22 percent to $1.53 billion. Net earned premiums were $1.38 billion, up 18 percent from 2006. Net income increased 13 percent to $326.8 million.

It also reported a 74.8 percent combined ratio and an after tax return on equity near 23 percent for 2007.

The acquisition of Philadelphia Consolidated marks a significant expansion into the U.S. market and complements Tokio Marine’s recent international growth initiatives. In March, Tokio Marine completed the acquisition of London-based Kiln, a major Lloyd’s insurer.

Philadelphia Consolidated, whose subsidiaries include Philadelphia Insurance, has 47 offices and approximately 1,400 employees across the U.S. It writes primarily commercial lines; its personal lines business is currently in runoff mode. Its subsidiaries underwrite commercial property/casualty, professional liability and personal lines insurance products for select niches including nonprofits; the health, fitness and wellness industry; select classes of professional liability; rental car industry; automobile leasing industry; and homeowners and manufactured housing markets.

Its subsidiaries include Philadelphia Indemnity Insurance Co., a property/casualty insurer; and Philadelphia Insurance Co., a surplus lines insurer.

The acquisition is subject to the approval of regulatory authorities in Japan and the U.S.

ACE Limited

ACE Limited completed the previously-announced redomestication of the company from the Cayman Islands to Zurich, Switzerland. ACE said it continues to be registered with the Securities and Exchange Commission and prepare its financial statements in U.S. dollars and in accordance with U.S. GAAP reporting. The company’s common shares will continue to trade on the New York Stock Exchange under the ticker symbol ACE.

Royal Bank of Scotland

Royal Bank of Scotland looks increasingly likely to shelve plans to sell its insurance arm and turn instead to other smaller deals to shore up its capital, reported Reuters.

RBS announced plans to sell Britain’s largest car insurer in April. But the operation’s trading conditions have deteriorated and its top suitors have pulled out — leaving the bank with the unpalatable prospect of selling an attractive asset at a steep discount to its target price tag of around $14 billion.

Zurich Financial Services had been seen as the front-runner to buy the insurance arm but pulled out last month, leaving Germany’s Allianz and U.S. firm Allstate as the last serious bidders, people familiar with the matter have said. Travelers has also been named as a suitor.

AIG, Vermont Mutual

Giant insurer American International Group has decided to enter the Massachusetts private passenger auto insurance market. But big AIG is not alone.

Vermont Mutual will begin selling personal auto insurance policies in the state by the fourth quarter of this year, CEO Thomas Tierney told Insurance Journal. “Massachusetts is an opportunity to bring more to our agents and policyholders,” said Tierney, whose company already sells homeowners and business owners policies in the state. It also sells in Maine, New Hampshire and Vermont.

The insurers are being attracted to the state’s newly deregulated auto insurance market.

The online unit of Progressive Insurance as well as Peerless Insurance, a Liberty Mutual regional company, have also entered the state since it changed its regulations.

Liberty Mutual, Beijing

Liberty Insurance Co. Limited (LICL), a wholly owned subsidiary of Boston-based Liberty Mutual Group, has been granted approval to establish a branch in Beijing by the China Insurance Regulatory Commission (CIRC).

Topics USA Vermont Japan